South Africa’s Shanduka Group has paid $335 million for a stake in MTN Nigeria, the West African country’s largest mobile-phone business.

Describing itself as a black-owned and managed investment holding company, Shanduka (Sandton, South Africa) has acquired the stake from three private investors but not disclosed how much of MTN Nigeria it now owns.

The operator is majority owned by South Africa’s MTN Group (Johannesburg, South Africa), which holds a 78.83% stake in the company.

The transaction represents Shanduka’s largest investment so far outside South Africa, where economic growth appears to be stalling.

“This is Shanduka’s most significant investment in another African country,” said Phuti Mahanyele, Shanduka’s chief executive, in a statement. “It is a business that is well established within a market that has great potential for further growth. Shanduka will continue to pursue opportunities in other parts of Africa.”

Nigeria remains Africa’s most populous country and its telecoms market is still relatively undeveloped, with 60.4 mobile subscriptions for every 100 people, according to data from the Economist Intelligence Unit.

MTN Nigeria claims a market share of about 48%, with some 45.64 million subscribers, and grew its customer base by 5.7% between the second and third quarters.

The operator faces tough competition, however, which led to a 9.3% fall in average revenue per user (ARPU) over the same period.

MTN Nigeria has also been struggling to cope with rising volumes of traffic on its network. In a recent conference call with analysts, Brett Goschen, MTN Nigeria’s chief executive, said “our network is stretched to the limit”.

The operator is addressing network quality and capacity through what it calls “a comprehensive network rollout programme” but there are concerns this could put pressure on capital expenditure.

Damage caused by flooding in October may have exacerbated the problem, although Goschen has said “even with that setback we still believe we will achieve our [capex] guidance for the year”.